Models vs. reality

The anemic United States’ economic recovery bedevils the President, Congress, the Federal Reserve, et al. I believe a big reason for mismatch between policy and outcomes are that models used today, don’t capture accurately, the large amount of US Consumer debt and its impact of future spending behavior.

10+ years of stagnant wages, prompted the American Consumer, to make up the difference borrowing, via credit cards and refinanced mortgages. Their credit cards maxed out, mortgages underwater, and uncertainty in the job market, reduces demand. Efforts to counter instead go towards debt payment, not new expenditures.